The key to curb the prevalence of underground insurance policies is to eradicate their social and economic bases. Through financial economic analytical approaches, this paper analyzes the demand and supply, competition between mainland and Hong Kang and Macao's insurance companies, and the regulation of underground insurance policies and points out that promotion of mainland insurance company competence is the crucial means to eliminate underground policies and promotion of insurance management is the basic method to crack down the prevalence of underground insurance policies.